diff --git a/packages/@angular/cli/commands/new.ts b/packages/@angular/cli/commands/new.ts
index 02ff828c130b..1cf13cf70048 100644
--- a/packages/@angular/cli/commands/new.ts
+++ b/packages/@angular/cli/commands/new.ts
@@ -138,7 +138,7 @@ const NewCommand = Command.extend({
       commandOptions.skipGit = true;
     }
 
-    const directoryName = path.join(process.cwd(),
+    const directoryName = path.join(process.env.PWD || process.cwd(),
       commandOptions.directory ? commandOptions.directory : packageName);
 
     const initCommand = new InitCommand({